Under California law, a trustee has significant responsibilities. Some of the most important of these arise upon the death of the person creating the trust – called the trustor or settlor.
In many cases the trustor acted as a trustee during his or her lifetime, with a successor trustee named to take over upon their death. One of the first duties of a successor trustee is to execute an Acceptance of Trusteeship. This document confirms the trustee has accepted the position of trustee and the responsibilities that go with it. The trustee may also want to sign a Certification of Trust, which, along with the Acceptance of Trusteeship, serves as proof of the trustee’s authority.
The trustee must fulfill several notice obligations. Some revocable trusts become irrevocable upon the trustor’s death. In these cases the trustee must give notice of the trust to all the trustor’s heirs and all beneficiaries of the trust. If the trustor received Medi-Cal benefits or other medical benefits from the state, the trustee must notify the state Director of Health Services, so the state can determine whether to assert a lien against the estate. If the trust assets include real estate in California, the trustee must also give notice to the property tax Assessor’s Office in each county where real estate is located.
The trustee must prepare an inventory of the estate and determine whether any federal estate taxes must be paid; prepare estate tax returns if necessary; and make sure the trustor’s income tax returns are filed, and any taxes paid, for the last year the trustor was alive. In some circumstances the trustee will also have to file income tax returns on behalf of the trust itself.
When setting up a trust, it is critical to appoint a trustee who is able and willing to carry out these responsibilities. Trustees who need advice on how to meet their obligations can benefit from consulting a knowledgeable trust attorney.
Source: Santa Clara County Superior Court, “Probate Trusts,” accessed Oct. 23, 2016